Comcast admits defeat, terminates Time Warner Cable merger agreement

Comcast regrets not being able to "bring our great products to new cities."

Comcast and Time Warner Cable announced the termination of their merger agreement this morning, ending the proposed combination of the nation's two largest cable companies. Comcast had lobbied on behalf of the merger for more than a year but faced opposition from the Department of Justice and Federal Communications Commission.

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“Today, we move on. Of course, we would have liked to bring our great products to new cities, but we structured this deal so that if the government didn’t agree, we could walk away," Comcast CEO Brian Roberts said in the company's statement. "Comcast NBCUniversal is a unique company with strong momentum. Throughout this entire process, our employees have kept their eye on the ball and we have had fantastic operating results. I want to thank them and the employees of Time Warner Cable for their tireless efforts. I couldn’t be more proud of this company and I am truly excited for what’s next.”

The deal was structured so that Comcast would not have to pay a breakup fee to Time Warner Cable.

The end of the merger also prevents Charter's plan to expand. Charter stood to gain customers in system swaps that were contingent on the Comcast/TWC transaction. Charter's plan to buy Bright House Networks was also contingent on the deal being approved.

FCC Chairman Tom Wheeler issued a statement saying that preventing the merger "is in the best interests of consumers. The proposed transaction would have created a company with the most broadband and video subscribers in the nation alongside the ownership of significant programming interests."

Wheeler had not commented publicly on his opinion of the merger until now. "Today, an online video market is emerging that offers new business models and greater consumer choice," he said. "The proposed merger would have posed an unacceptable risk to competition and innovation, including to the ability of online video providers to reach and serve consumers. I am especially proud of our close working relationship throughout the review process with the Antitrust Division of the Department of Justice. Our collaboration provided both agencies with a deeper understanding of the important issues of innovation and competition that the proposed transaction raised.”

Attorney General Eric Holder also said the merger breakup "is the best outcome for American consumers." The Department of Justice had "informed the companies that it had significant concerns that the merger would make Comcast an unavoidable gatekeeper for Internet-based services that rely on a broadband connection to reach consumers."

Comcast announced its $45.2 billion agreement to buy Time Warner Cable on Feb. 13, 2014, claiming it would be "pro-consumer" and that it would not reduce competition because the companies do not compete against each other. Consumer advocacy groups immediately cried foul, saying a larger Comcast would have greater ability to harm rivals and consumers.

A bigger Comcast, opponents said, would be able to charge higher network interconnection rates to online streaming companies like Netflix that need access to Comcast subscribers. Comcast's ownership of NBCUniversal, various regional sports networks, and other programming also came into play.

"If this deal goes through, Comcast never again will have to negotiate with Time Warner Cable when it comes to setting prices for NBC content," Sen. Al Franken (D-MN) said in one hearing on the merger.

Tales of awful customer service did not help the merger's chances. One customer recorded his attempt to cancel Comcast, in which a Comcast employee practically refused to disconnect his service. Many other recordings followed. Another pattern of misbehavior involved customer service representatives changing billing account names to "Asshole" and other insults.

Time Warner Cable isn't any better, as the two companies rank as the two most hated in their industry, according to the American Customer Satisfaction Index. Because of the merger breakup, they will have to continue separately, with Time Warner Cable serving its 12.3 million broadband and 10.9 million TV customers, and Comcast serving its 21.9 million broadband and 22.4 million TV subscribers.